Does your LVR not treat you no good no more? Can’t work out if you’re a mortgagee or a mortgagor? Demystify the house buying and home lending process by learning the language.
A loan designed to bridge the gap between the purchase of your new home and the sale of your current home.
Bridging loans are short–term loans and for as long as you have one, you’ll be making payments on two loans. Bridging loans are charged at 1% above our standard variable interest rate.
An offer in principle from the bank of how much they could lend you, with final acceptance subject to the confirmation of certain criteria, like the value of the house you want to buy.
The date your home loan is started (drawn down) and the date your interest and repayments are calculated from.
When you apply for a home loan, you’ll generally need a deposit of 20% of the value of the property you want to buy. This will go towards your home loan and can also be used to pay a sales deposit on the property you want to buy.
Once your offer on a property has been accepted and gone unconditional, you’ll generally be asked for this sales deposit. It’s usually 5% - 10% of the purchase price and is paid to the seller or their real estate agent. It’s counted as part of your overall payment to the seller.
When you’ve paid your home loan back to the bank and the bank’s name is taken off the title.
Take away the amount still owing on your home loan – and any other debts you may have secured against it - from the property’s current market value. This is your equity.
How long a certain fixed interest rate applies to a loan. Can be between six months and five years.
An agreement where Kiwibank will hold a fixed interest rate for an extra 30 days over and above the normal period we hold rates.
For example, if you get pre-approved for a home loan, we’ll guarantee an interest rate for 45 days from the date we write your letter of confirmation. With a fixed rate lock option, you can extend this guarantee by 30 days to 75 days. If interest rates fall during your FRLO period, you can take the lower rate.
Freehold is the most common kind of property ownership in New Zealand. If you own a freehold property, it means you own both the land and anything built on it – unless there are any legal restrictions – like covenants, easements of restrictions under the Resource Management Act 1991. It’s sometimes also known as ‘fee simple’ ownership.
Some people (wrongly) use the word freehold, when they mean having a paid-off property. As in, ‘I’m looking forward to my house being freehold’.
If you are a guarantor on a loan, you’re agreeing to pay some or all of the loan if the borrower defaults on payments (i.e. if they stop paying, you have to start paying). Seek legal advice before agreeing to guarantee a loan and make sure you understand what you’re signing up for.
What the bank charges you on the money you borrow. Expressed as an annual percentage of the amount you borrow.
The payments you make to your loan either weekly, fortnightly or monthly.
A one-off payment to a third-party insurer, for First Home Loan customers. This insurance usually applies to customers who have less than 20% deposit.
How many years it’ll take to pay off your home loan. You can choose a loan repayment term between one and 30 years when you apply for your loan.
Although people commonly use the term mortgage to refer to a home loan, it actually refers to the legal document that gives a lender security over your property. This means if you stop paying your home loan your lender can sell your property to cover any potential losses.
The bank or company that loans the money and holds the mortgage.
If the borrower can’t pay their mortgage and the mortgagee has to sell the property to get their money back.
The borrower of a home loan.
The amount that the loan contract specifies must be paid at an agreed frequency (e.g. weekly, fortnightly or monthly).
The total amount you borrow. The amounts you repay regularly are usually made up of both principal and interest.
A revolving credit home loan is a transactional account, which you’ll get a credit limit on - like a big overdraft. You can have ATM access to the account and can withdraw money up to your credit limit whenever you like. There are no set repayments and you can deposit money whenever you like.
The value of the property that the Bank will be prepared to lend against, usually the same as the market value or the agreed purchase price.
With a table loan, the amount you have to repay stays the same each time (except for changes in interest rate). The payments go firstly to pay interest accrued on the loan, and anything left over goes toward the principle amount. At first, you’ll mostly be paying the interest on your loan, but as time goes on you’ll repay more and more of the principal.
Another word for 'period' or 'duration'. This word is used to describe the length of time an interest rate or loan will apply for.